69% of providers say they have raised prices to pass on heavier costs to customers
Stockholm, 20 March 2023 – According to a new report from Arelion, escalating energy prices and their impact on network operations are the prime concern for over half (53%) of business leaders, but many are also anxious about possible energy supply shortages with 43% citing this as their second-biggest worry. So major are the issues, that 45% of leaders have admitted to having suffered significant stress over the recent energy price surges, with 14% going so far as to say that the situation is actually causing them to lose sleep.
Decision-makers in the US are particularly affected, with almost a third (29%) suffering from sleepless nights. The survey was conducted in the US, UK, France and Germany, and the report “The energy crisis: is it hurting enterprise networks?” provides insights into the impact that the energy crisis is having on network operations and, in particular, what effect it has had on the wider network sustainability agenda.
With energy prices escalating across the globe, most businesses are having to pay more for the energy they use. The findings of Arelion’s latest research reveal that many leaders have concerns over the immediate future, with 35% worrying about the ongoing impact of high costs in the year ahead. These concerns over the immediate future are most evident in the banking industry, with half of leaders in this sector worrying about the ongoing impact of high costs on their operations in the coming year.
The Pricing Impact
Higher prices are the key issue for European businesses’ network operations – with concern peaking among German leaders at 66%. An overwhelming 82% of leaders say that increased energy costs in the network have had a medium or high impact on the way they price their own services. As a result, 69% have raised their own prices, effectively passing on some or all of their heavier cost burden. This is especially the case in Europe and particularly in Germany where 78% have pushed up their own prices to customers, compared to the 57% of US business leaders who have done so.
Surprisingly, 18% of decision makers across all the markets surveyed say they have reduced prices to their customers, perhaps swallowing the additional costs to boost competitiveness in a distressed business environment.
But the findings of the research were not all bad news. The quest for improved energy efficiency has, in fact, spurred 61% of businesses to increase investment in their network operations.
The Sustainability Impact
Business leaders in the US appear to be at the forefront of this movement as 73% said that they have increased investment to make their network operations more energy efficient. In Europe, 69% of German, 49% of UK and 48% of French decision-makers have also taken this step.
Alongside enhanced energy efficiency, another positive effect of the energy crisis has seen over half of businesses (52%) speeding up and strengthening their network sustainability efforts. US businesses appear to be taking the lead on Europe again here with 65% of US decision-makers saying that they are boosting their sustainability efforts versus 55% in Germany, 42% in France and 40% in the UK. That said, some cause for concern remains from the finding that, overall, 29% of businesses have seen their sustainability efforts impeded by the energy crisis.
Looking to the future and identifying which sustainable energy sources business leaders in these key markets believe have the greatest potential for powering network operations, 40% of respondents elected for clean, renewable solar power. While this was the case with businesses in most countries, the notable exception is France, where 51% of leaders see nuclear power as having most potential – compared with a maximum of 18% elsewhere. This seems to reflect France’s long history of investment in nuclear power production, relatively high dependence upon it, and cultural pro-nuclear acceptance.
Commenting on the results of the survey, Mattias Fridström, Chief Evangelist at Arelion said: “The business impact of network energy consumption varies across different industry verticals and is ultimately far greater for businesses whose networks are a significant part of their operational expenditure. This research has provided some valuable insights into the impact on the industry and those working within it. Network operators are particularly vulnerable to a volatile energy market. As a large global network operator ourselves, we too are challenged by these increasing costs.
“What’s clear is that the transition towards more sustainable networks has hastened as a result of the energy crisis and investments in power efficiency are shortening the upgrade cycle for network infrastructure.”
Research was conducted on behalf of Arelion by Savanta, a global leader in digital data collection. A survey was carried out online in the second half of 2022 with 324 industry representatives in the US, UK, Germany, and France.
All participants in the research work for enterprises with more than 4,000 people. They come from a range of industries, led by: IT services (103); Banking (60); Manufacturing/engineering (52). All participants are involved in decision-making regarding their company’s network development strategy, with 56% having the last word and final sign-off responsibility for this area.
Arelion solves global connectivity challenges for multinational enterprises whose businesses rely on digital infrastructure. On top of the world’s #1 ranked IP backbone and a unique ecosystem of cloud and network service providers, we provide an award-winning customer experience to customers in more than 125 countries worldwide. Our global Internet services connect more than 700 cloud, security and content providers with low latency. For further resilience, our private Cloud Connect service connects directly to Amazon Web Services, Microsoft Azure, Google Cloud, IBM Cloud and Oracle Cloud across North America, Europe and Asia.
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